Innovation Process

February 01, 2012

The future is scary and there are reasons for it. I have been giving a lot of keynotes lately to different professional organizations and senior executive roundtables and my keynote topic of strategic innovation and design thinking went beyond innovating to find growth and adapting to new economic, market, political and social order. I shared ideas on the future of economic development, the come-back of manufacturing, developing glocal innovation networks and creative or self-destruction of old establishments and the renewal and transformation of the modern enterprise.

There were never ending questions from the audiences on these topics. I can write a book on them, I guess I won’t have time. I hardly have time to get enough sleep. Everyone is looking for a theory to anchor. The future has never been so uncertain and almost any economic theories invented decades ago has become another working white paper again. The very old ideas of management and strategy taught in b-schools are so dated and when I look at the 800+ management books I have on my bookshelf, I am guessing 80% of them are completely irrelevant (50% were irrelevant when they were first written).

Some turn to other knowledge disciplines to look for sources of inspirations. The field of business strategy borrowed heavily from industrial economics and the filed of management sciences borrowed heavily on organizational psychology. What about "Strategic Foresights?” Where can we look for anchors and new inspirations? How about mathematics?

Fuzzy logic is the branch of mathematics that says that science isn't about absolute truth; it's just a heap of guesses at a reality that's much more complicated than that. The term “Fuzzy Logic” emerged in the development of the theory of fuzzy sets by Lotfi Zadeh (1965). A fuzzy subset A of a (crisp) set X is characterized by assigning to each element x of X the degree of membership of x in A (e.g., X is a group of people, A the fuzzy set of old people in X). Now if X is a set of propositions then its elements may be assigned their degree of truth, which may be “absolutely true,” “absolutely false” or some intermediate truth degree: a proposition may be more true than another proposition.

Professor Bart Kosko (Professor of Electrical Engineering in the University of Southern California's Viterbi School of Engineering and a Professor of Engineering and Law in USC's Gould School of Law) draws out some pretty interesting applications of that theory. He lost his faith and rediscovers it in science. The fuzzy future is part bog-standard libertarianism (with a side of Reaganomics), part extropian hooting-and-hollering, part small boy reveling in the Tolstoy and Clancy school of military exchange, and part Rube Goldberg engineering of unlikely theory, all bound up in hundred of pages of inscrutable equations in the footnotes.

My teaching on 'Design Thinking" goes beyond many simple (and shallow) creative tools. Forget those three wheels of design, technology or whatever. Those are complete BS. "Design thinking" is comfortable with change, it is disruptive and provocative by nature, and promotes new ways of looking at problems, often through new lenses. The strategic framing of complex and ambiguous issues requires thinking approaches that are free from organizational dogmas, codified limitations and old assumptions.

A large part of the design thinking process is to step out of roles conventions and free oneself from these dogmas and explore new frames of thought and approaches to problem solving. I am using "Design Thinking" to push us to rethink everything from scratch, including the tools of logic itself. Most people believe creativity means there is no logic. But what is creativity anyway? Or what is design? We need to look at the world or our business or social challenges with a fuzzy prism. It is like watching 3D movies without the 3D glasses. You can never make sense of the present and the future by using conventional lenses and logic.

In a world of full of chaos, unpredictability and fuzziness we need to look at the world through a fuzzy prism. Here is what Dr. Bart Kosco has to say, "How do you upload yourself onto a chip?" The fuzziest fact of all. The problem with current schemes in theory is a binary shock, when all of a sudden you die in meat, and wake up in chip. So how do you do it consciously? We could cut out that little chunk of your brain and replace it with an equally functioning chip, maybe a more powerful chip. We could keep doing it, while you're wide-awake. So in the end, you've completely transferred to a network of chips, and your brain is a bunch of sodium chunks in a jar of formaldehyde.

For the modern enterprise to evolve, survive and even prosper in the future, any change and transformation effort cannot just be putting on bandages. There is no one single future state to map against current state. There could be a range of different strategic futures and companies need to be ready for all of those. It takes a very different kind of transformation process when the future state is unknown.

January 02, 2012

What is creativity? How does it happen? How do we prepare ourselves for it? Or can you at all? Do you have to be a whole-brain thinker, or do you only need the right side of your brain? Can you be rational and logical while being creative? I dedicated a whole issue of M/I/S/C/ to "Creativity" and this is now in bookstores in 25 countries.

Scott Adams, a popular cartoonist suggested, "Creativity is allowing yourself to make mistakes. Art is knowing which ones to keep." I don’t think that’s necessarily the case. Mistake is part of anything and applied creativity is no exception, so I can be doing something uncreative and still makes mistakes.

Someone once suggested, “Creativity can never be achieved by imitations, and what is already been introduced.” That’s also not true. Some of the best creative pieces in science, art and engineering are results of imitations and experimentations. It is naïve to say creativity means not imitating.

Creative people usually have a few features that distinguish them from others. First, they posses both a rich body of domain-relevant knowledge and well-developed expressive skills (verbal, body movement or drawing or combination of all). Academics and creative managers like to describe creativity as a process, I think that is just nonsense. I belong to the school of Vinacke, which believes that creative thinking in the arts does not follow any models.

Gestalt philosophers like Wertheimer have also asserted that the process of creative thinking is an integrated line of thought that does not lend itself to the framework implied by the steps of a model. There is no process. It is your brain working. Despite that, many design or creative companies will tell you that they have a four-step process. Don’t be fooled: these are marketing constructs designed by marketers to make clients feel comfortable with what is essentially a messy, inscrutable phenomenon. Leave the boardroom and ask the creative department if they follow a process and you’ll get a very different answer. Or no answer at all.

Trying to reduce creativity to a linear process is counter-intuitive. Real creativity emerges from managed chaos and applied fuzzy logic. It’s never about careful calculations. It is something we will never be able to understand for a long time.

December 13, 2011

We had our Idea Couture Christmas staff part last week. Looking back there were a lot being accomplished and a lot more to do. What started as a little experiment bringing multi-disciplinary design thinkers together and now becoming a key driving force and intellectual engine advancing the practice of design thinking in innovation and business applications. Idea Couture is where multidisciplinary thinkers come together with shared purpose and where creativity flourishes. I am looking forward to have our London and Mexico City offices running in 3-6 months. I feel I have the right people in place and that's a great start.

At Idea Couture, creativity means more than just novelty ideas. It means new ways to frame problem, using new lenses and developing new perspectives. I am so happy when I see happy people in the company doing great things. I am happy to see people growing and that's gives me tremendous satisfaction.

At the end of the day, we're in the business of producing the non-conforming super smart and creative thinkers and doers. I am pushing the envelope everyday and so far no one is complaining. Heartiest thanks to my management team who did a great job of putting togther the first Idea Couture Award. You guys rock!

On the road this week and spending time with people hearing them talk about their innovation challenges and how they apply design thinking. Lots of great meetings. We're aware of the big changes coming ahead. Every business, government and instirutions will be impacted. Change does not creep up on us every 10 or 20 years, it is an ever-present business and organization phenomenon that is disrupting industries and causing firms and industries to disappear. Although the degree and velocity of change is unprecedented.

Everyday we’re dealing with more and more unknown and unknowable, but decisions still need to be made. Many of the challenges today are unique and have few or no precedents, so textbook solutions (and no guru don’t waste time buying whatever best sellers) or trying to find aHarvard Business School case study. Past solutions do not necessarily apply today. The external environment is constantly absorbing shocks from technological advancement, cultural change and systems failure.

Creativity is needed everywhere to rethink and reimagine products, experiences, companies, processes and even industries. Top executives are looking everywhere for new thinking and solutions that are outside the routine of orthodox strategies and old paradigms. So where can you look for new ideas? And how can you design an environment in which creative people can survive, thrive and flourish? We can begin by asking, how can you make people creatively forget what they know in order to reinvent the future? This is where sensemaking comes into play.

A big part of sensemaking is creative “forgetting” and it is first thing you must do. We all create our own environments and then constrained by them. Being able to aware and realize the impact of our own behavior in creating the environment in which we’re in is a very important first step. Forget who we are is something worth practicing. There may not be any scientific evidence to suggest that those who know what to forget can think more creatively about the future, but in the formulation of business strategy, creativity can be seriously constrained if it is burdened by the past. The problem lies in the notion of “core competencies,” which suggest that companies should stick to what they know best. If that’s the case, then why many of those once great companies should still be around.

October 27, 2011

I've just delivered an opening keynote in Mexico City for AMAP. The topic was STRATEGY IN THE AGE OF INN0VATION: How do we anticipate and leverage industry breakpoints? A very engaging audience and the weather was great. The keynote was based on the notion that companies should not only aware of when industry breakpoints are happening, they can also strategically create one to upset the industry status and create an environment for a new game.

Most people understand what the S-curve is in terms of technology but less so on what it means in terms of organizational design and strategic innovation. If you are not the no. 1 or no. 2 market leader, then you should consider deliberately creating an industry breakpoint to upset the market leaders. So how does one create an industry breakpoint and are there any pre-conditions? To make that happen, companies must be able to:

To learn about the breakpoint potential in the industry and have a sense about when it will happen (through strategic foresights)

To commit to making a quantum organizational change (through creating a case for transformation)

Having an economic engine (cash flow) to sustain the transformation (and do not take your eyes off from the core as you need it to sustain the transformation effort).

I’ve seen people making the mistake of getting extreme pressure from investors when their core businesses are eroding and the future business are at embryonic stages. I see industry breakpoints within the beverage industry; consumer electronics industry, fashion and active wear industry and even the advertising agency business.

At the very basic, more executives see the challenges and fail to understand the implications and how to manage them. The bigger the organizations the bigger the challenges are. Most would resort to hiring a top tier management consultancy and after months of analysis the recommendations would either be

Invest in a particular product/segment/market that is growing and disinvest in markets that are too small

Acquire a growing competitor to add to revenue per share

Acquire a bigger competitor to gain better control of the market and increase market power.

None of these solutions are about innovation and worse; their key competitor would hire a management consultancy and came out with exactly the same recommendations. No wonder they are all locked into this zero-sum game. The reason people come to us is our ability to bring imagination and strategic foresights into the strategy process and creating new ideas not only to reinvent the core but also to re-imagine the future. So how do you recognize industry breakpoints? Here are the early signs:

Falling demand for standardized products

Declining margins in the industry due to low cost good value competition

Rationalization of the availability of new sources of supplies or technologiesas amplified signals

New entrants pushing a new value curve supporting by different economics

New entrants/existing competitor promoting new behavior that can be disruptive And remember, it is far easier to try to create an industry breakpoints then reacting to one.

Many companies come to this too late and it is a lot harder to innovate when market share and earnings are under pressure. When earnings are under extreme pressure it will affect CEO’s credibility and even a good strategy can be misunderstood by analysts and critics.

October 22, 2011

What is value creation? Something commonly used in strategic discussions but not well understood among managers as well as business or design school students. If a company needs to reinvent itself, they need put value creation first. If a disrupter wants to attack an industry leader, it needs to put value creation first. If your company want to grow your way to greatness, put value creation first. If your company wants to stay relevant, put value creation first.

There are many practical issues that affect value: from the nature of owners and investors to the shifting perception and behavior of the financial market, smart and foolish ways to invest, divest, reorganize and acquire etc. At the very core, it is about how companies create value by investing capital to generate future cash flows at higher rates of return than their cost of capital. And how different ownership structures and organization designs could affect value. Here I am talking about one level below.

For business managers, technologists and design professionals this means creating value with everyday decision. Value is the source of competitive differentiation. Here are a few ideas for you to think about:

Every innovation manager needs to know or consider constantly how each new ideas will benefit consumers and in what way whether helping them to perform, produce, organize certain things or feel certain way. Value can be both tangible and intangible. Customer value needs to be created first before you can think about capturing them. Value creationn before value capture.

Every innovation manager must understand and better than their competitors at understanding where, how and why value is created and destroyed within your industry and your company. Not only by business unit, by product, by customer, by channel, by market, by technology, or whatever that best reveal your formula that drives value creation.

Every innovation manager needs to know how their decisions will enable the organization to create, deliver and capture new value from change and foresight. By bringing new perspectives, they can help executives to make better future-informed decisions that create value.

Every innovation managers need to stay focused on the objective of creating value through purposeful innovation. Don’t be distracted by other management measurements and indicators that don’t build organizations (they are for managing organizations, not building them) and avoid the trap of spend time managing the lagging indicator rather than creating real value for the future.

Every innovation manager needs to remember that creating value is also about managing expectations. They need to accept that even great ideas will fall flat and some mediocre ideas will be successful and timing can be a key factor. Avoid "short-termism" and confusing product extension is innovation. The best way we can build successful innovation that delivers growth is by putting value creation first.

A misunderstanding of “value” is causing many companies to be “recklessly cautious” or "creatively overwhelm" and forgetting that they are competing for tomorrow’s market and cash flow – not yesterdays. And by their “short-termism” they are passing up terrific opportunities to create long-term value. “Short-termism” is not good for innovation.

September 19, 2011

I am writing about a few articles on creativity for the next issue of M/I/S/C The Creativity Issue. The editorial deadline is this week so I am now selecting the pieces that goes into this issue and art directing the design. I am still not sure what to do with the cover yet, I have a few days to think about it. May be 2 or 3. Busy week with cocktail paties and b-school alum events. Here are pictures of IC end of summer party, but arn't we just a week away from end of fall?

Creativity is an easy subject to write about but also a difficult one. Creativity is too heavily linked to novelty rather than purposeful creativity that powers up innovation and create positive and sometimes disruptive change. I am looking forward to finish writing this and move on to my day job – which is helping clients with design thinking tools, frameworks, processes and organizational design to make innovation a discipline.

The key difference between creativity and innovation is that while any idea can be an expression of creativity, it must create both customer value and economic value, and preferably social value, for it to be considered innovation. Innovation is a discipline. It is not a group of people pumping out ideas (which is the easy part); innovation is essentially the application of high creativity, applied across different disciplines from product design to marketing and channel strategy.

How can innovation be turned into a discipline? It is the discipline of getting deep customer insight;the discipline of sense making from different data sources; the discipline of managing ideas along the innovation life cycle; the discipline of capturing the imagination of customers and employees; and the discipline of managing internal resistance and stakeholder expectations.

The discipline needs to crossover with strategy, marketing, insight and product development in order to create breakthrough ideas, to fuel growth, to completely transform the ways that companies are managing themselves on the front end and the back end of their processes.

There is an interesting event Optimizing Innovation 2011 (3rd Annual Cross-Industry Event) to be held in New York City, Oct 19th and 20th. A very interesting speaker list includes Fabienne Jacquet (Director, External Innovation Global Technology at Colgate Palmolive), Pascal Mignolet (International Marketing/Intelligence Director Coffee & Tea at Sara Lee),Jorge Carbo (Senior Innovation/Project Director at Nike), Dondeena Bradley (VP, Global Design & Development at Pepsico) and Hannes Erler (VP Innovation at Swarovksi). It is a great opportunity to get to learn the secrets of success from the most experienced innovators so to put these ideas into practices. See you there.

August 02, 2011

What a month, from Phoenix to Cincinnati, then New York City, then Monterrey (Mexico) to Moscow and now in London. Meetings after meetings and I don't know where I am. It is like that guy in the movie. I need to have a week sitting down and do some work. Perhaps next week. Saw my magazines in Selfrides and it is flying off the shelves everywhere. We still need to expand the distribution from the current 22 countries to 30. And getting the iPad version out. This has been a productive couple of days in London. I realized I haven't have the chance to work with Morgan for a long while. We just finished our deck for tomorrow's presentation. It is going to be a good one. And really looking forward to meet some of the people there again. Just adding a few more slides on intuition. I always love talking about this topic. And I like Morgan's Burberry shirt.

Henry Mintzberg once suggested some twenty years ago that managers need more than just analytical skills to do their jobs well; they also needed the intuitive (right brain thinking), he was right but he didn’t write a book about it. He should have.

Intuition is hard for many and good use of intuition often requires deep introspection. Chester Barnard in The Functions of the Executive (1968) suggested that managers use non-logical decision-making, which balances rational and intuitive.

“I have found it convenient and significant for practical purposes to consider these mental processes consist of two groups, which I shall call ‘non-logical’ and ‘logical’. These are not scientific classifications, but I shall ask you to keep them in your minds for the present, as I shall use them throughout this lecture. In ordinary experience the two classes of intellectual operations are not clearly separated but meld into each other. By ‘logical processes’ I mean conscious thinking which could be expressed in words or other symbols, that is, reasoning. By ‘non-logical processes’ I mean those not capable of being expressed in words or as reasoning, which is only known by judgment, decision or action."

Not that I suggest we need to start a MA degree in Strategic Intuition. Although it might attract a good number of students, I think it should be part of business school foundational teachings. I teach this at my Harvard Design Thinking Program and other in-company programs, people were excited as if they have just discovered this untapped potential. Intuition is something that should be reorganized and managed like any other element in the decision-making environment, particularly in a team environment.

The over reliance on quantitative analytics are common, numbers are very important, but it needs to be combined with other things. Often the most promising innovative ideas with long-term strategic upside are exactly those that are impossible to quantify. And they ended up being shelved.

Freek Vermeulen of London Business School just wrote a very good piece on how insisting on early quantitative validation is creating a problem. He said the reason why companies are still so eager to see numbers because the long-term, uncertain aspects of strategic investment decisions make us rather insecure whether we’d be doing the right thing; therefore, we really would like to see some numbers to lull ourselves into the belief that we’ve been thorough and have uncovered the facts and have a solid basis on which we’re accepting or rejecting the proposed course of action. Of course that’s just make-belief (you can make numbers say whatever you want them to say) and may make you quite myopic; missing the things that are difficult to quantify but just as important.

He is obviously not suggesting that we should get rid of numbers in strategy altogether. Heck no; forcing yourself to go through some sort of quantifying exercise can sometimes make you uncover and realize things that you hadn’t thought of before. He suggests that once we’ve carefully and painstakingly produced all the numbers then toss them aside and sort of make a decision based on our gut feel and experience. Very good advice.

July 20, 2011

Innovation is now a very hot topic at the C-Suites. I have speaking a lot on the subect the last 5 years. The funny part is I am talking about Strategic Innovation and many still talk about Technology Innovation as if it was the sole source of innovation. People are very interested in my interpretation of Build-to-Last and the idea of Build-to-Fail-Fast. (Photos by Anddres Ahues)

Every large companies is thinking about it and most have little idea how to integrate that with the organization’s strategic intent; how to make it work within certain organizational structure; how to decide which project to fund; how to create a balance between reenergizing the core and attaching white space; what types of people to staff the innovation function; or simply what capabilities gap are needed to fill.

We just finished a comprehensive study of 42 top companies across 5 industries to understand what challenges and barriers that exist as well as little success stories. Generally speaking there are less success stories as we dig deeper but it is fine since they are at the early stage of the learning curve. We codified the knowledge in lessons learned as well design and implementation options as well as capabilities gap and how to fill them. It is not a 50,000 ft view but a very pragmatic understand of the situations and every company can learn from it.

The most common mistakes fell within the following:

Focus too much on break-though ideas or staying too close to the core

Not focus enough on creating break-through ideas and results in only incremental ideas

Using existing (advertising and market research) vendors and infrastructures as well as toolkits that are not designed for innovation but apply them anyway and not getting the results desired.

Fail to articulate the core purpose of innovation and how it is driven by the strategic intent and value creation

Totally don’t understand the concept of ‘whitespace mapping’ let along the sense-making process behind it, and just called it ‘brainstorming’

Fail to create a space that allow people to play and experiment and fail safely. A physical space that people with shared interest to play with ideas.

The idea of an innovation space is a good one. Even Microsoft has a space called Garage, a place opened last week that gives their staff access to tools such as a soldering bench, a laser cutter and a 3D printer to make prototypes and connect people with shared interest.

The Garage is in one of the oldest Microsoft buildings in campus but lots of windows. They filled the building with new "pods," basically temporary work spaces where teams of 2-6 employees can set up shop to collaborate on projects for a couple of weeks.

It is an attempt to create a safe place to fail. Fail as much as you like that and you wont get demerit points. Like all large companies, any good idea can get lost quickly because the initial market size is too small or it is threat to the core. Every company should explore having a space like this. Or they can house them in one of our offices that are even better.

June 26, 2011

For those of you who are not familiar with Muggles, they are people who are incapable of magic, and who are usually unaware of the wizarding world. Design Thinking is sort of like wizardries, it takes certain type of people with the certain type of training, Hogwarts or Harvard.

When Muggles think Design Thinking, they see nothing new there and they believe it has been around for a long time, it basically means they still don’t get it and may never will. They hardly see the real challenge, it is simply not to invent a better mouse traps. We care capable of doing more and being more innovative. The power of our imagaination is what it is.

"It is our choices that show what we truly are, far more than our abilities." ~J.K. Rowling, Harry Potter and the Chamber of Secrets, 1999, spoken by the character Albus Dumbledore

Design Thinkin is alot more than lateral thinking and creativity de Bono style or ad agency style brainstorming. Design Thinking fills the gap created by management theories and business schools which analytical thinking and data-driven decision making override intuition where empathy is never part of the equation.

Companies have been battered by system level economic failure, extreme uncertainties, and the failure of traditional forms of strategic making, leadership styles and management model. These wounds have left businesses gazing hopefully towards Design Thinking. Design Thinking is bringing a refreshed, revitalized, and rejuvenated approach to management and strategic thinking- however, design thinking is far from a cure-all. It takes a certain type of people who are comfortable with different thinking styles. I’ve read so much poorly written papers about design thinking and many of them don’t even grab the basic principles and its true transformational power.

Often people talk narrowly about design and prototyping, but Design Thinking is not just bringing the power of empathetic creative problem-solving to bear on a human needs, it is an organization culture, a mindset, a framework and a toolkit to solve complex wicked problems that we created. It provides a balance between the needs to create customer value, shareholder return and social value. Design Thinking is strategic.

Everyone comes to me hoping to join Idea Couture claims they are creative, they have great ideas and can turn ideas into great products and create new markets. Go deeper and I ask the how… there comes the sound of silence. Great Idea, great products, great business is a tagline, not a strategy. Design Thinking can be applied to fill the gaps of traditional strategic thinking. The increasingly complex needs of the business need a new toolkit and Design Thinking is exactly what is needed. It helps to uncover new needs, creatively redefine value, reconfiguration of value-chain activities, develop compelling brand narratives and create markets that are yet to exist. When my friend Roger Martin advocates Design Thinking, he is not talking about ethnography or prototyping; he is talking about a whole new management paradigm.

Everything is designed—from behavior, systems, organizations to public policies. Design is universal. The dirty secrets of why how big corporations destroy shareholder value are actually no secrets. Everyone from the board of directors to the frontline employees knows 'why' a company is 'stuck.' Because their structures and management systems are so rigid and can’t adapt to changing market shifts or respond to any disruptions; their over focus on core competencies and optimization that prevent them to see beyond the core and; fail to see and anticipate the future and even if they see it they fail to act on it. This is where Design Thinking comes into play.

Everyone understands the need to make money and everyone hope they can do magic. And everyday many moguls are trying to create magic with cute packaging and fancy taglines and hoping to make a lot of money, off course it won’t work. The real magic lies in understanding deep human desire and unmet needs and anticipate emerging behavior, not every company truly understands how to do it. They teach those at the Ministry of Design Thinking.

May 23, 2011

It is time to take a look at the report card of our design for business organization, management and strategy. After half a century of quality movement, brand management, marketing and catefory management, globalization, customer service automation and organizational design fine-tuning, we should have a pretty good of idea of what is working and what is not. As a result of all suboptimization efforts over past decades, we begin to see the impact on the whole system.

The idea is that optimizing the outcome for a subsystem will in general not optimize the outcome for the system as a whole. Some porodcts, brands, businesses are better at the expense of other things. This intrinsic difficulty may degenerate into the "tragedy of the commons": the exhaustion of shared resources because of competition between the subsystems. This is exactly what had been happening in different business units and functions including product design, marketing, operations and sales/channel management. The principle of suboptimization states that suboptimization in general does not lead to global optimization, and as whole businesses and societies are far worse. Here comes Design Thiking.

Finally, this is the Design Thinking Workbook for the Harvard Design Thinking Seminar. It ook us a week to put this together. Coming together nicely. Design Thinking allows us to to rethink, reimagaine and reset the game. I am not saying every company needs to make radical changes in its core business itself, and a lot of instances the case for change becomes desperately obvious – as in the case of Blockbuster, it came too late.

Business model redesign is driven by of strategic innovation (to play a new game). This means complete or partial transformation—of the organization, its core offerings, structure, systems, culture and capabilities—to create, deliver and capture value at the new way not in a sub-systems level.

Business model transformation may include a strategic decisions to move up-market or down-market or sideways along the value chain or shift from products to services or solutions when the pace of commoditization continues to accelerate or the industry boundaries is opening up for new entrants. The idea is to apply visual sense making as part of the Design Thinking tool kit to reimagine new value ecosystem and value chain reconfigurations.

Vvisual thinking can play a very vital part in the business design process. The key to successfully design a capital-efficient business model is to visually identifying assets, risks, and cash flows by their distinct risk characteristics and then visually modeling them and retaining only those that are central to how a company creates value.

The Harvard Design Thinking for Business Creativity Seminar in NYC tomorrow, for the first time I will be introducing these applications to people outside Idea Couture and expecting a large group of very senior executives and looking forward to a great day of intensive discussions. Here’s the workbook as takeaway together with the 150 slides. Here’s a first glance at the workbook and workshop material. Planning to bring this seminar to Europe and Asia next.

May 13, 2011

Lately I have been meeting with dozens of potential candidates who are seriously interested and passionate about design thinking and understand the role it plays in transforming organizations, design thinking can help companies to make the next quantum jump in organization, human and social evolution? It is a new managerial logic as well as competitive logic and in then years every business school will have this in their core curriculum. The problem is there are far more people interested in it and not many understand the ‘what’ and ‘how’. I am getting an average of 10 resumes a week and most people think design thinking is super cool.

The relationship between design thinking, system thinking and strategic innovation are pretty muddy and many conversersation and writing are mostly around the simple notions of observational research, prototyping and design. We’ve beaten that one to death long time ago and many of these conversations are missing the point.

I don’t think design thinking has come to a point when it is over hyped nor it has come to a point where people truly understand what it means and how to apply it. There is a design perspective, an engineer perspective and a business perspective to it. The challenge for many is the ‘how’, Idea Couture is the only company that has taken this to a practical level for business applications, and beyond telling people you need to be creative. Here is good piece on design thinking from Will Novosedlik's blog.

So far there are no empirical studies that look at a directed implementation of design thinking in business with the aim of improving strategic competitiveness, innovation capability and business performance. We don’t usually ask for a business case of HR, legal, compliances, risk management or strategy department, why are we asking for design thinking investment business case? Another reason for lack of concrete evidence is that is it is hard (and wrong) to compartmentalize design thinking into the format of a method, process or tool. Rather the approach should resemble an emergent learning journey where rapid experimentation, broadening of new perspectives and challenging of dogmas needs to be at the fore.

Design thinking is an emerging discipline and our work to date is a work-in-progress. It is not about getting brilliant ideas from the minds of geniuses or creative superstars. We don’t want creative superstars; we want people who understand cross-disciplinary and interdisciplinary collaboration and the importance of rigor, play, balance and discipline to create elegant objects, solutions and systems.

I have a great respect for Tim Brown who introduced the word design thinking although we have a very different definition and approach to it. He is a designer at heart and I am a strategist. Our jobs are similar which is to help identify patterns where others see complexity and confusion; we synthesize ideas from seemingly disparate fragments; and uncover solutions new opportunities. Design thinking is a method in which genius is not needed, just ordinary people with a lot of commonsense and empathy.

It has been a very productive week in Vienna talking to many interesting people including the organizer of Vienna Design Week and I am thinking about dong a special feature for our next issue. Vienna is an interesting city where it has a history of music and engineering, the two very different or similar domains depend how you look at it.

In addition to music, Austria has made a name for itself with the electronic engineering of customized electronics like microprocessors and integrated circuits for airbags, ABS braking systems and components for airplanes and high-speed trains etc.

I was staying at the top floor of Das Triest, loving it. The hotel is in the fourth district, which is set back about ten minutes straight walk from the city centre. An old hotel that was transformed into a luxurious, warm and unique contemporary design hotel by Sir Terence Conran, it was the first design hotel in Austria. The building was originally used as a stable for horses pulling stagecoaches between Vienna and Trieste - hence its name, "City of Trieste." The hotel design provides a sharp contrast to the city 19th-century Art Nouveau architecture. It has a lovely courtyard garden, which reflects Sir Terence Conran design philosophy and give a sense of Viennese flair with a little English touch. Perfect for Viennese summer party.

I literally had most of my meetings in the courtyard. It is very popular event venue for the entertainment business. I am thinking of hosting our next client's event there. Client innovation workshops with sacher tort for coffee time to be followed by a Mozart concert. I think that’s a really good idea.

May 02, 2011

I was visiting the biggest modern art gallery DOC (Centre for Contemporary Arts) in Holešovice, Prague. It was first opened in Oct 2008 and now going through some interior work and will be re-opening the other half in a week. It was developed by architect Ivan Kroupa and the idea was to reconstruct old factory buildings from the19th century and to build new ones interconnecting as an art gallery. It is like Idea Couture’s office in Toronto where three historic buildings were interconnected.

I am a big fan of contemporary art particular when it stretches the boundaries and interconnecting art, design, culture, media and technology. I am not an art for art sake person. I will add business to art, design and culture. That's what my magazine M/I/S/C is about.

The current exhibits include Petr Kvíčala’s collection of his older paintings and his Zig Zag Corridor paintings on the wall which creates optical effects on the big space – a 22m long corridor. Adding my pink shirt I feel like I am part of the exhibition. The newer works are more accurate or precise and resemble computer generated graphics guided by an algorithm expressible in mathematics. He is probably one of the most popular Czech abstract painter and artist. For the last 15 years, he has undertaken commissions for architecture-related projects which he collaborated with a number of leading architects both from the Czech Republic and abroad. The best part I like about his work was often the topics were initiated through rhythmical repetition of nature-based details.

Spent half a day at the museum and met some new friends there who were well connected with the design scene there, so I am thinking may be a future section for M/I/S/C magazine on Prague design. But for the next two days, I need to finish my Harvard Graduate School of Design’s Design Thinking for Creativity and Business Innovation Program in three weeks. I need to start putting the lecture material together the next few days before I have to jump into another project and another.

Looking at Petr Kvíčala’s work and to some extent his paintings that are determined by the surrounding space, I can relate that back to Design Thinking. It is disappointing for me to see consultants that barely understand the core values of Design Thinking but quickly turn that into a product/process and oversimplfy it into a few phases including observation, visualization/prototyping and business design. This is Design Thinking kindergarten level and barely scratches the surface of Design Thinking.

Design thinking itself is a dynamic constructive process that is iterative in nature. It requires ongoing definition, redefinition, representation, assessment, experimentation and visualization. It is a continuous learning experience arising out of a need to obtain and correctly apply knowledge and insights to achieve goals that may change as more in depth knowledge of the problem and its context is acquired and new behaviors unfold. Here, prototyping and the creation of tangible “sharable” artifacts becomes an import piece of the design thinking tool kit. The art of what/when/how/why of prototyping is barely understood by these consultants. Everyone throw the word “prototyping” around without knowing the answers to the what/when/how/why at all. What it is not a white board brain storming session sponsored by 3M sticky notes.

Design Thinking should be part of an organizational culture and can bring enterprise knowledge management to the next level. It helps to foster a creative intelligent culture that embraces questioning, challenge and discovery including frequent reflection-in-action, celebrating creativity, embracing ambiguity and visual sense making (interactions with physical objects as well as people). A Design Thinking organization creates strong “inspirationalization” and “creative bonding” to give tangibility to the emotional contract that employees that can have with the organizations.

March 31, 2011

One interesting dilemma about strategy and innovation is how far we move away from our core and more importantly how do you define the core? What are the core competencies of Gap? Netflix? LVMH? BMW? Hermes? Canon? Nike? Marc Jacob? Blackberry? Samsung? HP? Target? Starbucks? Do they even have anything in common?

Do you see core capabilities as distinct capabilities or deeply embedded values? Or special access to buyers or assets? There are hard core competencies and soft core competencies and people need to understand the difference and that they are not mutual exclusive. Core competencies are double-edged sword. How do you define ‘core competence?’ It is currently seen as a unique capability/know-how that provides some type of competitive advantage for an organization and it is not easy for other to replicate. It is not one thing; it corresponds to organization design, and involves underlying skills, systems, technologies and knowledge in specific industries or markets.

A simple test to see if something is a core competence, ask yourself, "Does this 'thing' give the company a unique advantage over its competitors and create value through a differentiated offer or extreme cost advantage or both?"

When my staff comes to me for career advice, I always ask them about their core. Who are you and what are you really good at? I advise them to find out what they like to do and what they’re good at, and if you combine skill, passion and strength, you are going to excel. You need to understand and align all those three. Likewise, companies gravitate towards their core competencies, capability and values.

Successful organizations adopt a rigorous approach to identifying and defining their core competencies and then single-mindedly pursue them. When market shifts and suddenly their core competencies and strategic assets all become strategic liabilities. It happens fast these days. The most important thing is to put innovation at the core and use design thinking to drive continuous renewal and reinvention. There is only one game – new game.

Auto makers have for years restricting themselves to a few tasks they do best -- designing and assembling automobiles -- offloading all other value chain activities to others. A web of suppliers produces the components that go into the car and a web of dealers sell, deliver and service the cars bought by consumers. By limiting their focus, auto makers are able to perform the tasks they undertake extremely efficient using Six Sigma. Apple is doing just the opposite.

Luxury goods companies for years restricting themselves to a few tasks they do best – designing collections, fashion shows production and retail management – offloading other value chain activities to others. The question is what seems to be a very creative (won’t use the word innovative) industries are mostly very old fashion companies that have done very little to transform the category, the industry and the economics. There are a very few notable exceptions. The reality is innovation and design thinking rarely happens in the fashion and luxury goods world. They need to break out of their current creative mode and start innovating. The new affluent luxury goods consumers are less interested in traditional status symbols and more interested in ‘content-rich socially-validated self-identity creation experiences.’” It is more than the logo, price and exclusivity. Many will wake up to this shift and realize this is not the customers they used to know for many years.

Today, organizations must confront the dilemmas of how to manage their core competencies and capabilities. These are systems, assets and skills that need to be continuously monitor, evaluate and ensuring they are up-to-date aligning to the company’s innovation agenda. This has been becoming increasing complex especially with so many uncertainties. When you start thinking about putting ‘design thinking’ as your core competencies, suddenly the idea of core competencies give new meanings.

We are going beyond the narrow definition of core competencies and you can think of ‘design thinking’ as your cultural capital: an organizational wide appreciation and practice of design thinking skills that can be leverage across solving channel problems; produce development, marketing and operation challenges. It is time to rethink the core definition of ‘core competencies.’

March 28, 2011

Do you trust your intuition? And if so why? Intuition is most practiced and least understood. And why some people are betting at it and some not? Can intuition be rational and strategic? Is there something called ‘strategic intuition?’ What makes your intuition strategic and mine not?

Most see an interesting connection between innovation, imagination and intuition. Often intuition may even exert a paranormal or even magical influence on everything new and unknown. What do we mean by intuition. In Educating Intuition Robin Hogarth describes various ways we can improve our intuition. He points out two notable impediments to the education of intuition. One is the presence of confusing or “wicked” environments where feedback is unreliable. The other is the limited scope or “domain specific” nature of intuition. Intuition can therefore inhibit innovation because such obstacles exist.

A person who has a giant database of ideas and insights and supported by fast access to those information as the brain processes these knowledge in a non-linear way and as a result the person is more likely to guess correctly in a more educated than others who do not posses the data points and fast access. In another word, a large database, faster access like a SSD drive and better classification of data.

A person who has a strong theoretical or philosophical understanding of why things happen through life experiences or as a scholar and therefore can quickly draw on those theories and associated metaphor and as a result can look at these very complex problems and not overwhelmed by its complexity. Getting right to the core and a possible decision pops out disguised as intuition. They perceive wholes and compress much into a flash. Philosophers and prophets are often intuitive. It is wisdom secretly disguised as intuition.

A person who has a strong logical and deductive reasoning capabilities and it to eliminate the impossibilities and therefore left with the more realistic options and by probability the person is in a better position to conclude. This can be dangerous as the person can be very wrong if the answers lie outside conventional logic. But in 90% of the time, the guess is correct due to the narrow nature of the problems. It is fast logic disguised as intuition.

Intuition is a very general word, it is not taught in school (may be art school) and we don’t know what prompt some rely more on it more and some completely ignore it. The value of intuition is not celebrated in the world of scientific management but commonly practice in the world of design thinking. Many CEOs made important decisions based on it but won't admit it. In the world of data-dominance, it is not easy to find a place for intuition, you can still use it discreetly. Or just call it innovation or sense-making.

March 23, 2011

Great party last night for my magazine M/I/S/C lunch party held at the 111 Minna Gallery in San Francisco. And Karin Wall (editor-in-chief) from Innovation Management joined us all the way from Sweden to co-launch their hard copy of Innovation Management with M/I/S/C. Cool people and great venue and not to mention good food. Exhausted after talking to 200+ people and there were about 20 people whom I last talked to was 7 years ago and actually never met in person and then there were some friends whom I have not seen for years. Oh what a night! And the girs at the office did a great job. I am thinking we should add 'party planning' to our innovation offerings. Anyhow, I have a lot of treat feedback on the magazine. Onto the next one!

I was watching the film ‘Inception’ on a long flight last week and I remembered one interesting dialogue from the film “How do you translate business strategy into emotion?”. I was not really watching as I was editing the next issue of M/I/S/C magazine, but the line caught my attention. I rewound it back and tried to make sure if I’ve heard it right. Yes. Translate business strategy into emotion!

That’s a great question and I am not sure people realize how important that question is. We’re human beings. And it is our emotion that makes us human. In business, we’re taught in business school about rational decision-making and fact-based decision making etc. etc. When it comes to design thinking and innovation, we realized how little we could apply these decision-making models. It is about the organizational culture as much as it is about process, framework and creativity.

The concept of organizational culture has drawn attention to the long-neglected, pretty subjective or the ‘soft’ side of organizational design. And many aspects of organizational culture, emotion and its relationship with design thinking have not received enough attention. Instead, emphasis has been placed primarily on the cultural and symbolic aspects that are relevant in an instrumental/pragmatic context. Organization culture is treated as a management tool and a instrument designed by management to shape employees' behavior. The idea of emotion is largely ignored.

The method of identifying organizational culture characteristics that foster innovation through design thinking is an interesting one. The more visible and tangible manifestations of culture are the artifacts. These may be easy to identify and observe but difficult to decipher. Values and state-of-mind tend to remain hidden and may only reflect rationalizations or aspirations. So often design thinking values are hidden deep within an organization and there are those who should design thinking and innovation and there is nothing beyond marketing slogans.

Can you pick a piece of documentation from an organization somewhere that can elicit some tacit aspects of design thinking and innovation culture? The idea is to provide a stimulus back to the organization so that they can reflect on an interpretation that is based on their cultural framework rather than on the corporate ethnography? What stimulus is required for the corporate ethnographer to get the dialogue flowing and what is need to provide a specific context but leave enough latitude for interpretation. This was achieved by asking the team members to discuss the concrete examples of successful and less successful application of design thinking in the context of their everyday work. Starting with data gathering and analysis, the idea is to gather data for any example of design thinking applications experienced by the team and allow the team members to talk about their experiences of application. The interviews were semi-structured and cognitive mapping techniques were used to capture the views of each participant.

The individual cognitive maps were individually validated and conflated into a single map to represent the company’s collective cognition. The single map was further validated and refined. In a parallel process each of the transcripts was analyzed and codes were produced from transcript content analysis that represented the aspects of organizational culture that influenced radical product innovation. This resulted in the clustering of codes into aggregate themes (higher level codes) that represented aspects of the design thinking culture that were collectively considered to be positively associated with the facilitation of innovative outcomes.

This type of work is still in an early stage but I believe it will be extremely useful for organization to understand how design thinking (and to what extend) is embedding in an organizational culture. Without this understands, they are talking about more design and prettier things, not more design thinking.